Should We Give Politicians a Carbon Tax as a New Source of Revenue?

I’ve written many times about the dangers of a value-added tax. I obviously think it’s a bad idea as an add-on tax, but I also think it’s dangerous as a replacement tax.

Not because it’s a horrible tax from a theoretical perspective (like the flat tax and national sales tax, it’s a single-rate system with no double taxation of income that is saved and invested), but instead because I don’t trust politicians.

All these arguments also are equally relevant to the debate about imposing a carbon tax.

As with the VAT, there are features of a carbon tax that make it a less-destructive alternative when compared to other forms of taxation. The problem is that politicians wouldn’t permanently lower or eliminate any other tax, and the new revenues would be used to further expand the size and scope of the federal government.

Andy Quinlan of the Center for Freedom and Prosperity discusses the issue in a column for Forbes. Here are some key excerpts.

With the economy sputtering toward what can at best be described as a meager recovery, it seems like an obviously poor time to consider raising taxes on any form of energy. …Yet that is also precisely what an unholy coalition of big spending liberals and misguided conservative economists is proposing – to raise taxes on carbon and send the economy spiraling toward another recession. Last month, Rep. Jim McDermott (D-WA) introduced the “Managed Carbon Price Act of 2012,” a bill that would require greenhouse gas emissions to be reduced by 80% from 2005 levels over the next 42 years – ultimately leaving the United States with per capita emissions levels lower than that of Haiti today. …At the fifth annual National Clean Energy Summit held in Las Vegas last month, Senate Majority Leader Harry Reid expressed his hope of enacting a carbon tax by next year. Senate Environment and Public Works Chairman Barbara Boxer went as far as to say that she would like to see it included in a year-end budget deal. …The motives of the left in pushing for a tax are easy to understand, they want more “revenue” to spend. A recent paper from the MIT Global Change Institute estimated one carbon tax proposal would generate $1.5 trillion over ten years, and politicians and the media immediately began to salivate at the idea of using such a tax as an excuse to further expand the burden of government spending. …If the political climate was such that cap-and-trade or other big government carbon regulations were on the horizon, proffering a more economically efficient carbon tax as an alternative might not be a bad strategy from a do-the-wrong-thing-in-the-least-destructive-fashion perspective. But that is not the case. …More generally, the very idea of offering a new tax in exchange for lower rates elsewhere is flawed. Even if leftists agree to lower taxes on income to keep a new carbon tax revenue neutral, there’s nothing to stop them from raising rates in the future. On the other hand, given the love politicians have for taxes, eliminating an entire tax would be much harder. A similar logic can be seen in the experience of Europe, where less economically destructive value-added taxes did not replace income taxes, but instead helped usher in the bloated, unsustainable European welfare states which are today circling the drain.

Wow, Reid, Boxer, and McDermott. That’s like the Three Stooges of Statism.

But this isn’t a laughing matter. Politicians would love to get their greedy hands on $1.5 trillion of new tax revenue. And Quinlan points out in the article that some Republicans are sympathetic to the idea.

Keep in mind, by the way, that $1.5 trillion would be the floor, not the ceiling. As we’re seeing in Japan, politicians can’t resist boosting the rate whenever they want to spend more money.

P.S. Read this if you want to see what happens when politicians get a new source of revenue.

A better descriptor for Europe is “Decline. “Crisis” implies something temporary, something that can be overcome. But Europe’s situation is one of permenent and relenlessly compounding decline, as even the supposedly healthier amongst European economies are on a 1-2% growth trendline in a world that’s is riding a5% annual growth trendline. Thus even those luckier of European nations are on average losing three percent a year from their relative world prosperity standing. More importantly, the dynamics of weaning Europeans from the hope of prosperity through flatter effort-reward curves and central planning that pulls everyone into centralized institutionalized solutions, are impossible. Hence the outcome of decline is inevitable for Europe.

That is the same path Americans have now chosen, and it is irreversible. Just like in Europe, other factors will be blamed for the sub-par growth trendline and relentless loss of once unique and enviable prosperity. The movie will play in America , just as it played in virtually every country in Europe, even before the formation of the EU which is now applying a uniform path to decline. For America, given the fact that September 11 seems to have been the pivotal date that ushered American collectivism to majoritarian status, OBL has won – hands down! Osama set the pivotal stone and Obama is cementing convergence of the American psyche to worldwide averagedom. Economic and prosperity averagedom will inevitably follow.

P.S. Americans may have taken the irreversible step towards collectivism and decline regardless of terrorism. Maybe the issue had just matured maybe entropy had finally taken over. Nonetheless whether coincidence or substance, seems like 9/11 played a major role.

The lib-prog politicians running DC already tried to set this up as the Chicago Climate Exchange with a bevy of lib-prog poliicians as the primary stakeholders all laid out to get Bill Gates wealthy on our bucks. Obama, Podesta, Gore, a laundry list of who’s who on the left ready to dip hands into our pockets and take the money for themselves. It only crashed because the folks fudging the studies got found out. Otherwise it’d be up and running and impossible to stop. They have not forgotten how close they came to sequestering that much power. They want to do it again. The intensity with which they want this makes me think that this is something that should never be allowed.

To insist that CO2 is a problem and should be regulated ignores basic science and creates an imaginary problem. Any decent engineer could tell you that water vapor has 1800 times the greenhouse gas effect of CO2. So if we DOUBLED the CO2, water vapor would have only 1799 times the effect. And the people pushing (putsching ?) the concept don’t even have any computer models that accomodate the influence of clouds, which are a major factor in the effect. They also don’t have any accomodation for the effect of the solar conveyor, another major effect. Yet they use the models as justification for accumulating trillions of dollars of control? And to themsleves? For our “benefit”? It is amazing that they are still being taken seriously.

[…] had to say about a few of the various tax options. We’ll start with the carbon tax, which I recently explained was a bad idea if imposed inside the U.S. by politicians in Washington. It’s a horrible idea if imposed globally by the kleptocrats at the United Nations. …a […]

[…] Japan made that mistake years ago. The choice to increase the tax rate just shows why it’s dangerous to give politicians any new source of revenue. So this isn’t the worst policy development of 2012, particularly since the new Japanese […]

[…] but Japan made that mistake years ago. The choice to increase the tax rate just shows why it’s dangerous to give politicians any new source of revenue. So this isn’t the worst policy development of 2012, particularly since the new Japanese […]

[…] $5,500 per year for a family of four!) for the United States. A few gullible folks think this might not be a bad idea if the money gets used to lower other taxes, but they’re the same people who get suckered […]

[…] $5,500 per year for a family of four!) for the United States. A few gullible folks think this might not be a bad idea if the money gets used to lower other taxes, but they’re the same people who get suckered into […]

[…] but Japan made that mistake years ago. The choice to increase the tax rate just shows why it’s dangerous to give politicians any new source of revenue. So this isn’t the worst policy development of 2012, particularly since the new Japanese […]